Gov. Rell: Budget Surplus Growing; CT in Stronger Position to Pay Down Debt

Governor M. Jodi Rell today announced that her budget office is projecting that the state will finish this fiscal year, which ends June 30, with a budget surplus of $242.9 million, an increase of $76 million over last month’s estimates.

“As our economy slowly recovers the news continues to get better for our state budget and our taxpayers. We have three straight months of surplus and have added jobs in Connecticut in each of the last five months. People are going back to work, consumers are spending more and our revenues have begun to climb.

“Our state is now in a much stronger position to cut down borrowing”, Governor Rell said. “If these projections hold, we will be able to apply more than $100 million of that surplus to pay down our securitization debt. I have been adamant throughout budget negotiations that any and all surplus must be applied to debt payments.”

The two-year budget, which the Governor signed on May 7, requires that the first $140 million in surplus be used as revenue to balance Fiscal Year 2011. Any amount of surplus over that will be used to reduce borrowing needs.

The Office of Policy and Management (OPM), the Governor’s budget office, said the latest figures reflect increased revenue of $58.9 million, an increase in projected agency lapses of $20.5 million and a $3.4 million adjustment of refunds for escheated property.

According to OPM the state sales tax estimate increased by $30 million, largely due to improving collection rate. It is the second straight month of growth in sales tax revenue. Other changes include an improvement of $10 million in tax refunds that were lower than projected. Collection of fees, licenses and permits also have improved by $12 million.

“The past two years have put an incredible burden on state finances and our taxpayers, so this news really is uplifting. My Administration will continue to employ efficiencies to reduce spending, maximize federal grants and help businesses generate jobs” the Governor said. “These OPM projections are the latest in a week of some very good economic news for Connecticut.”

Governor Rell also announced this week the creation of 700 new engineering jobs as a result of Electric Boat’s purchase of a former Pfizer facility in New London. The state is helping EB by providing a $15 million grant and other tax incentives to move forward with the deal. Just this week, the Connecticut became the first state in the nation to gain federal approval to transfer 45,000 low-income single adults from a state-funded health plan to Medicaid. The result is improved medical benefits and potential $53 million in saving for state payers.